Hyundai Motor Company plans to set up a car assembly plant in Pakistan in a joint venture with local textile firm Nishat Mills, an official from Nishat said on Friday.

Hyundai's return to Pakistan will boost the government's efforts to shake up the Japanese-dominated car market and loosen the grip of Toyota, Honda and Suzuki, who assemble cars in Pakistan with local partners.

Hyundai and South Korea's Kia Motor used to assemble cars in Pakistan until 2004 but withdrew after their local partner Dewan Farooque Motors Limited went bust.

It was not clear how much capital Hyundai, South Korea's largest automaker, would itself invest in the Pakistani venture. Representatives for Hyundai could not immediately be reached for comment.

Nishat Mills is a subsidiary of Nishat Group, a giant in the Pakistani banking, textiles, energy and cement sectors. Its share price rose 1.4 percent after the announcement.

“Today we have signed a memorandum of understanding between the two companies and we will set up a ... project for the assembly and sales of both passenger and commercial vehicles,” Nishat Mills company secretary Khalid Chauhan said.

Nishat Mills filed a statement with the Pakistan Stock Exchange saying the deal was “subject to applicable statutory and regulatory approvals”.

Last year, French carmaker Renault agreed to invest in a new factory in Pakistan and South Korean carmaker Kia Motor Co said it would start assembling cars in a joint venture with Karachi-listed Lucky Cement, part of the vast conglomerate Yunus Brothers Group.

The government believes increased competition should bring down exceptionally high car prices in Pakistan, and in March it introduced a new auto policy favouring new entrants into the market by offering generous import duties.

The incentives have angered existing market players, some of whom have said publicly they should get similar terms.

Pakistan, with a population of nearly 200 million people, is a potentially huge market, but just 180,000 cars were sold in the 2014/2015 fiscal year. That compares with more than 2 million passenger vehicles a year in neighbouring India.

Opinion

Editorial

Warming ties
05 Jul, 2022

Warming ties

BILATERAL ties with the US are clearly on the mend after an extensive rough patch under the PTI government. While ...
LNG emergency
Updated 05 Jul, 2022

LNG emergency

The problem is that Pakistan does not have sufficient cash at the moment to buy even a single LNG cargo at present prices.
The invisible half
05 Jul, 2022

The invisible half

WHAT better illustrates the Afghan Taliban’s misogynistic and mediaeval worldview than the fact that not a single...
Wise counsel
Updated 04 Jul, 2022

Wise counsel

Fuelling the fires of communalism for petty political gains is dangerous and can have a long-lasting impact on India’s stability.
Hazardous waste
04 Jul, 2022

Hazardous waste

GIVEN we have not yet developed streamlined systems for managing locally produced hazardous waste, we are inviting...
Mob ‘justice’
04 Jul, 2022

Mob ‘justice’

OVER the past few days, a string of deadly incidents has been reported from Karachi in which enraged mobs have...